Guest Post: How An Equity Market Prices In Recession

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Wed, 06/29/2011 - 17:36 | 1413484 Highrev
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Tyler, I think someone else mentioned it earlier, but could you slow down a bit?

;-)

 

Wed, 06/29/2011 - 17:43 | 1413494 Raymond K Hassel
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Slow down?  I would have requested the opposite, except it would be rude to ask.

Wed, 06/29/2011 - 17:47 | 1413506 FunkyMonkeyBoy
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For f**k sake Tyler, pull your finger out... more updates please, this site is too static. 

Wed, 06/29/2011 - 19:18 | 1413825 carbonmutant
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LOL...

Wed, 06/29/2011 - 20:09 | 1413987 The Fonz
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That is a terrible idea! Although I would like to say that Tyler(s) have been outputing extrodinarily high quality work at a stunning pace of late! ON A RAMPAGE FOR JUSTICE! 

On a side note: I was saying to a friend of mine that I need to learn as much from Tyler as I can becuase I don't think he will be around after the crisis. He is the kind of person that appears in a time of crisis and fights for us all. The quality and accesibility of this info to my mind cannot simply be a business plan, but there must be a passion behind it that is driven by these times.  Pay attention while you can, if you can aquire a good portion of Tylers skill you will never want for money again in your life, and then you too might be free enough to pick something worthwhile to fight for besides your next paycheck. That is what I hope for!

Wed, 06/29/2011 - 23:17 | 1414429 Thomas
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Insert Editorial Comment: I am glad to see you back, Macro Story. We beat ya up pretty badly (and maybe unjustly) on that recent blog. No hard feelings. Just kinda caught a nerve. As Aristotle is reputed to have said, "An educated person can entertain an idea without endorsing it." I guess we go back to school for more education some times.

Thu, 06/30/2011 - 00:16 | 1414524 MacroStory
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I knew what kind of kids played in this sandbox before I entered it so no harm done.  This group is nothing compared to the unions I used to work "with" in my old corporate days.

Wed, 06/29/2011 - 23:23 | 1414432 Thomas
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Editorial Addendum: First I miss the math problem (sheesh) and then I double post. It's back to school on the short bus.

Thu, 06/30/2011 - 06:27 | 1414812 zKeyserSoze
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last week
David Bloom: 'Is There a Bigger Armageddon Out There?'

http://www.cnbc.com/id/43505730/David_Bloom_Is_There_a_Bigger_Armageddon_Out_There

this week, dollar's in trouble at 5.20 min

Guest Host David Bloom

http://classic.cnbc.com/id/15840232?video=2030678890&play=1

Wed, 06/29/2011 - 17:41 | 1413502 mynhair
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One more day, that should do it.  Just one.

Wed, 06/29/2011 - 18:14 | 1413590 Bob
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LOFL.

Wed, 06/29/2011 - 17:43 | 1413508 There is No Spoon
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How An Equity Market Prices In Recession - it doesn't. In the past, conventional wisdom dictated that the stock market anticipates six months ahead. In the chart it's clear that the market didn't even anticipate two months ahead - it was in the middle of its range when the recession began.

Wed, 06/29/2011 - 21:57 | 1414259 Zero Govt
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i'd agree with that ...the US property sector topped in 2006 then turned down.. the US stock markets didn't really nose-dive hard until Q3 2008 so i fail to see how self-annointed 'experts' like Rob Prechter (beaten hands down by a coin toss at market predictions) call the stock indexes "lead indicators". Surely we should look at all sectors for signs of tiring and collapse?

Prechter says the Indexes are "a process" of a number of sectors topping at slightly different times ...so we can safely say the Indexes are an averaging indicator, not a lead indicator, and pretty 'slow to show' given guidence in housing 2 years earlier

the other point Prechter makes is the Indexes are overly positive measures because bankrupt companies get taken out of the Indexes and replaced with still solvent ones so they do not reflect the actual carnage 'dropping' big negative numbers. So the Indexes are a rose-tinted spectecles, much delayed averaging unit of measure, not an accurate sharp as a tac lead indicator then!!

And given the Nasdaq has now retraced 100% of its 2008 to March 2009 decline you have to ask what fuking planet are these Indexes on given the shit-state of everything? Probably coming from the same planet, Uranus, that Prechter and his Elliott Wave muppets come from

Wed, 06/29/2011 - 17:47 | 1413518 statlawyer
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looks like someone else has spotted the H&S about to finish off :)   cheers-

Wed, 06/29/2011 - 17:54 | 1413539 steve from virginia
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The market is starting to price in the running out of ideas.

 

Wed, 06/29/2011 - 18:24 | 1413629 Freddie
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LOL!  How do you price anything when it is totally corrupt and manipulated everywhere.

JPM, GS, The Fed, BS fake Chinese IPOs, HFT, Arbs, the options and futures exchanges.  The whole thing is a totally corrupt fiat joke.

Wed, 06/29/2011 - 18:36 | 1413677 Jimbo Jones
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SH and RWM is how I priced it in... just hope I can find a bigger sucker down the road.

Wed, 06/29/2011 - 20:21 | 1414031 The Fonz
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I noticed one way you can price it in.  You see point D on the graph? In 2007 it dipped below the 200 DMA, this time it did not. At first this worried me, then I remembered I had watched the market all day during those times. There were several days where the market was obviously propped up over 780 in the RUT.  This 2011 market would have done the same without manipulation. If you want to price in manipulation I think you can mark those reflection points above the 200DMA as the extent of the ability to manipulate.  It's important to note they can't just pull a number out of their ass and make it happen, they need the market to help them, ie the 200 DMA line. Also you can price in manipulation by the amount of time it works. If for instance JPM whacks silver and sends it straight down with shorts, and it pops right back up to the previous level, they'll have a LOT of shorts they couldn't clear, and they'll back off until they can make a market whackjob stick. Rule of thumb is if they can't get it to hold 50% of the move they falsely make they'll usually back off, at least in the PM markets. All you have to do is remember where they want the manipulation to drive the market and watch out for levels they can drive one way or another and the market will allow them to hold.

Wed, 06/29/2011 - 19:00 | 1413744 Stares straight...
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lol

 

Wed, 06/29/2011 - 17:55 | 1413542 mr. mirbach
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despite the cyclical nature of history 'tis a pity lessons from the past are never learned. "This time it's different!"

Wed, 06/29/2011 - 18:02 | 1413546 tallen
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It's all transitory.

/s

Wed, 06/29/2011 - 18:05 | 1413558 Mr Lennon Hendrix
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The dollar is not a safe haven anymore.  Quite bitching and get used to it.

Wed, 06/29/2011 - 18:03 | 1413567 mynhair
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Wait 3 hrs and try reposting that.

Wed, 06/29/2011 - 18:24 | 1413618 Mr Lennon Hendrix
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Economies have been mired in depression for decades, the dollar has lost its ass to inflation to the end sum, and you want me to do what now?

Wed, 06/29/2011 - 18:06 | 1413570 banksterhater
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The withholding tax is back to 1 yr ago, the WLI (ECRI) has been down for how many weeks? 6? The market was all windowdressing, it's not pricing in any caution plus the Mafia is unloading the Cream of the Shit IPOs, if that isn't the end, don't know what is.

Watch initial claims, ISM and next weeks jobs# will be in the toilet.

Wed, 06/29/2011 - 18:04 | 1413571 foxman
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When was the last time the FED forecast a recession?

Wed, 06/29/2011 - 20:23 | 1414045 baby_BLYTHE
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they never have and always point the finger of blame elsewhere.

Listen to Ron Paul school Benocide on the Great Depression. Ben is a total buffoon.

http://www.youtube.com/watch?v=dv6rQ0U01Yc

Wed, 06/29/2011 - 18:05 | 1413572 rocker
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Seems to be pretty good stuff.  But, it sure would be nice to see time lines indicated. Please !!!

Wed, 06/29/2011 - 18:13 | 1413587 mynhair
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Think it's a weekly chart.

Wed, 06/29/2011 - 19:03 | 1413759 MacroStory
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It's a daily chart with the 07 high in October and the current high May. I zoomed in so and cropped out the dates because I already had too much on them. Sorry!

Wed, 06/29/2011 - 18:09 | 1413576 Bob
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The symmetry of the two charts is remarkable.  I may need to schedule an eye appointment after that one.  Wow. 

Wed, 06/29/2011 - 18:12 | 1413583 urbanelf
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Fuck it.  FAS: ALL IN

Wed, 06/29/2011 - 18:16 | 1413608 mynhair
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That's the spirit!  After all, it is a casino.

Wed, 06/29/2011 - 18:26 | 1413640 banksterhater
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The PDs buy their own bank stocks to windowdress end of Q, easiest way to move market. You've got a big old gap, and $26 is resistance, good luck if you don't take profits fast enough.

http://stockcharts.com/h-sc/ui?s=FAS&p=D&b=5&g=0&id=p02077290925

Wed, 06/29/2011 - 18:43 | 1413692 urbanelf
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Oh, I'm fast, alright.

Watch this...

... didn't see it, did you?

Wed, 06/29/2011 - 23:44 | 1414471 The Fonz
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So its the Elves that run the HFT! I should have known after Alex Jones explained that bit about DMT elves.... That actually explains a lot!

Wed, 06/29/2011 - 18:09 | 1413584 zorba THE GREEK
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 We have all the same problems now that we had in 2007, only now they are

 bigger because we didn't address them before. We also have more problems

 now, like Europe meltdown and Mideast uprising and China looks more shaky now.

 We also didn't have Japan's nuclear crisis, which to date hasn't been resolved.

 We are now facing a global financial crisis which is larger and  far reaching

 than that of 2007 and due to massive government debt and insolvent banking

 system, we are in a weaker position to defend the economy and prevent a total

 meltdown.

 

 

 

 

 

 

 

 

 

 

Wed, 06/29/2011 - 18:58 | 1413753 Stares straight...
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Iambic pentameter or cut and paste?

Wed, 06/29/2011 - 18:29 | 1413636 boiltherich
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This is much worse than 1974 and different in so many ways.  For one thing they were not churning billions of shares a day back then with front running computer programs. 

The "market" isn't pricing anything at all, GS, JPM, Citi, a few others, along with FRBNY and Treasury are doing all the pricing.  But what does it matter anymore?  Without a stable dollar nobody could possibly price anything with any assurance of being right, or close to right, and in those circumstance one just prices higher and hopes for the best. 

I have not heard much lately about what market shorts are up to, or disclosures on insider trades, anyone got the quick dirt on those?  Retirement can really slow a guy down.

Thu, 06/30/2011 - 07:09 | 1414854 Bob Paulson
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That article assumes that inflation figures are accurate. We all know those figures are as cooked as an Irish stew.

Wed, 06/29/2011 - 18:14 | 1413602 YesWeKahn
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Too much money has no where to park. This is the only way.

Wed, 06/29/2011 - 18:27 | 1413642 Freddie
Freddie's picture

Too much worthless fiat money.

Wed, 06/29/2011 - 18:14 | 1413604 Zeilschip
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Let's see what happens if the S&P ends up on July 1st...

Wed, 06/29/2011 - 22:23 | 1414344 carbonmutant
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Meredith Whitney: Beware July 1

... she warned that July 1 is going to be a key date for the muni market, because that’s when new state budgets are going to take effect, slashing aid to many localities.

Wed, 06/29/2011 - 18:22 | 1413622 GlassHammer
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"Low cash market"

^A good three word summation of the equity market.

 


Wed, 06/29/2011 - 18:27 | 1413625 PulauHantu29
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<<When I step back I see a deteriorating economy and an equity market trying to understand what to do.>>

I am moving more into cash (and gld  slv) every day. "stocks" are super risky right now.

Wed, 06/29/2011 - 18:35 | 1413659 banksterhater
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GLD is a buck from resistance, volume in crapper on this move, this will be going MUCH lower. Good luck. Silver is worse, it will go back to 28.

http://stockcharts.com/h-sc/ui?s=GLD&p=D&b=5&g=0&id=p45334350935

Wed, 06/29/2011 - 18:33 | 1413666 Solarman
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With cash, make sure it is not in a European money market fund.  You won't know unless you ask, GLD and SLV are derivative vehicles with a promise to pay.  If their sponsors have financial difficulty you lose.  So be careful.

Wed, 06/29/2011 - 19:54 | 1413944 apberusdisvet
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Pulau:  I very very strongly suggest you start putting Harvey Organ on your daily reading list;  he usually posts before 7:30pm est.

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